Technology-powered real estate company Redfin Corp. announced its second quarter earnings Thursday after the close of the stock market.
The company, which laid off about 6% of it’s workforce in June due to a downturn in home purchases as interest rates increased at the fastest pace since the mid-1980s, reported that:
- Second quarter revenue was $606.9 million, an increase of 29% compared to the second quarter of 2021. First-quarter revenues were $597.3 million.
- Gross profit was $118 million, a decrease of 6% year-over-year. Gross profit was $72.5 million in the first quarter.
- Real estate services gross profit was $74.1 million, a decrease of 16% year-over-year.
- Real estate services gross margin was 29%, compared to 35% in the second quarter of 2021. Real estate services gross profit was $23.7 million in the first quarter.
- Net loss was $78.1 million, compared to a net loss of $27.9 million in the second quarter of 2021. Net loss was $90.8 million in the first quarter of this year.
- Net loss attributable to common stock was $78.5 million. Net loss per share attributable to common stock, diluted, was $0.73, compared to net loss per share, diluted, of $0.29 in the second quarter of 2021. Net loss per share attributable to common stock, diluted, was $0.86 in the first quarter.
- Adjusted EBITDA loss was $28.6 million, compared to adjusted EBITDA income of $2.8 million in the second quarter of 2021.
“The housing market took a turn for the worse in the second quarter,” Redfin CEO Glenn Kelman said in a news release Thursday. “But I have never been more proud of how this company has responded: we cut costs, grew traffic, accelerated share gains and loyalty sales, lowered voluntary attrition and, for the first time since April 2020, improved the rate at which people buying homes stuck with a Redfin agent."
During an earnings call, Kelman also acknowledged that the company’s performance was below the expectations set forth after the first-quarter results were announced, and pointed to the interest rate hikes and hiring too aggressively during the pandemic.
“In the five years as a public company, we have never fallen short of our revenue projections,” he said. "But this is also true, that even as the housing market weakened our results, Redfin has gotten stronger. We expanded our site from 91% of the homes in America to 94% to compete as a national rather than a regional destination."
Chris Nielsen, Redfin’s chief financial officer, also spoke during the earnings call, saying the second quarter was a volatile one with quicker-than-expected declines and that the company was being responsive to the changing environment and taking actions to manage toward profitability, including reducing the number of homes the company purchases, laying people off, and limiting backfills.
“Second-quarter revenue was $607 million, up 29% from a year ago and below the low end of our $613 million to $650 million guidance range," he said. "The difference was due to a quicker than anticipated decline in refinancing and purchase-home volumes for Bay Equity."
Kelman said he expected the company, including the iBuying sector, to still be profitable for the year, despite the challenges ahead in the next two quarters. “It would take a fairly apocalyptic (iBuying) price drop for us to end up in the negative,” he said.
Looking forward, company officials said that in the third quarter they expect total revenue between $590 million and $627 million, representing a year-over-year growth between 9% and 16% compared to the third quarter of 2021.
Included within total revenue are real estate services segment revenue between $200 million and $208 million, properties segment revenue between $305 million and $330 million, rentals revenue between $37 million and $38 million and mortgage revenue between $45 million and $48 million, officials said.
Officials also expect total net losses to be between $87 million and $79 million, compared to net loss of $19 million in the third quarter of 2021. Company officials said the guidance includes approximately $37 million in total marketing expenses, $19 million of stock-based compensation, $16 million of depreciation and amortization, and $5 million of net interest expense.
Officials expect adjusted EBITDA loss to be between $47 million and $39 million in the third quarter. The company also expects to pay a quarterly dividend of 30,640 shares of common stock to its preferred stockholders.
